First, in spite of the polls showing that he’s being held responsible for the government shutdown and his pre-shutdown bragging that he would be proud to be blamed for it happening, Donald Trump apparently believes that he’s winning the shutdown fight. He currently has little incentive to do any differently than he’s currently doing.

Second, after taking their oaths of office, the new House Democratic majority’s immediate effort this week will be to pass legislation that, if enacted, will reopen the federal government. Therefore, House Democrats also have no reason to do anything differently.

Third, the reopen-the-government effort will then fall directly into Republican Majority Leader Mitch McConnell’s (R-KY) lap. With the House likely to pass something that almost certainly doesn’t have the votes to pass the Senate, it will be up to McConnell to negotiate some kind of deal with either Trump or House Democrats, take the heat for not being able to do either or cause his Republican majority to take more of the blame for not being able to resolve the situation.

In other words, the shutdown is about to be all about Mitch.

This will be happening at the shutdown witching hour, when the lack of paychecks for federal employees will be hitting the point where there is real economic hardship for them, their families and the businesses that rely on them. Time will be of the essence.

It will also be happening as financial markets will be looking for reasons to stand down from their recent volatility and a shutdown deal (or no deal) will provide one of those.

And it will also be happening as everyone is looking for clues as to how Washington will be able to operate with the new divided political control. This will not just be the first test; it may well turnout to be the biggest test of the year.

McConnell choice will be stark: either try to reinforce Trump’s wishes on the wall or try to talk him into doing something different and perhaps keeping the fight alive.

The worst thing for Trump will be for Mitch to conclude that overriding his veto of a bill that reopens the government is the only way to get out of this situation. It will be politically messy and could put Trump into the kind of tweet storm rant against McConnell that he uses frequently against others. That could send financial markets reeling.

A veto override could also result in Trump looking for even more things to distract attention from what many would consider his worst legislative rebuke ever, especially because it would come by the hands of Senate Republicans.

The most logical solution will be to extend the time so something may be negotiated by reopening the government for another month or so. But this is Trump; logic won’t necessarily be the guiding force unless McConnell is able to convince him that a veto override will be far worse for him in both the long- and short-run.

If McConnell can’t do that, or can’t get the votes for the override he may need, this shutdown is going to set records for political ugliness and ineptitude.

The two-week delay in the government shutdown showdown that congressional leaders apparently have negotiated with the White House makes it less likely…and perhaps far less likely…that a shutdown will actually occur this year.

First, the longer a lame duck session of Congress goes on, the less likely that a retiring or defeated representative or senator will be around to vote at all or can be counted on to vote reliably with their leadership. They have to vacate their offices, will be losing staff, have to find a new job, have to move out of Washington and, in general, are far less focussed on being a member of Congress.

As a result, the GOP leadership will be credibly able to tell the White House that it can’t be certain of the vote count on any issue, including the one that is most likely to trigger a shutdown — the wall Trump wants built between the United States and Mexico. Because of that, Speaker Paul Ryan (R-WI) and Majority Leader Mitch McConnell (R-KY) will most likely counsel Trump not to push the issue with a shutdown.

Second, the new deadline is just four days away from Christmas. Not only will representatives and senators hate being in Washington over the holiday while a resolution of the shutdown is attempted, the bad media from furloughing federal employees and the damage it might do to the economy will be much more intense than it would have been had the shutdown occurred in the middle of December.

Third, late December will be only about two weeks before the Democrats take control of the House of Representatives and could be more logically blamed by Trump for failing to fund his wall. That should make it much easier for the president to see the political wisdom of agreeing to a short-term continuing resolution in late December that will create a confrontation with Democrats just a few weeks later.

The Washington Postis reporting this morning that, because of Ex-President George H.W. Bush’s death, Congress and the White House may agree to extend the current continuing resolution by a week or so and, therefore, delay a possible federal government shutdown.

Don’t be fooled.

Bush’s death and the events that have been scheduled this week to commemorate his life almost certainly will be a cover story rather than the actual reason this Friday’s shutdown showdown may be delayed.

The real reason will be that neither the White House nor Senate Republicans have the votes they need. If they did, the debate and vote would have taken place this week “in President George H.W. Bush’s memory and honor.”

This is one of the most basic truisms of legislating in Washington: You stop talking and take the vote as soon as possible when you’ve got enough to win. When you don’t, you figure out a way to delay.

A delay in the shutdown deadline past December 7 was always likely even if Ex-President Bush had not died. Negotiations over funding for the wall Trump wants built between the U.S. and Mexico we’re going very slowly and it was becoming increasingly clear that there wouldn’t be an agreement by the this-Friday-at-midnight deadline.

Plus Congress and the White House had left themselves room to maneuver when they made the original deadline December 7, two weeks before Christmas. While they may have hoped and prayed they would be able to resolve the funding fight by this Friday, there was always the possibility that it could be extended.

The question now is will even this new deadline provide enough time for Trump and Congress to come to an agreement over the wall.

Lame duck sessions of Congress get more difficult the later they get in December because defeated and retiring representatives and senators don’t vote as reliably, and sometimes don’t show up to vote at all.

In addition, as I posted last week, it’s still not clear that, for all his chest pounding, Trump really wants to force the showdown now. Indeed, his rapid willingness to consider delaying the shutdown deadline is very likely a sign that he’s not really sure he knows what he wants to do.

Over at Bloomberg Opinion, Jonathan Bernstein has a very important piece this morning about how Donald “Trump is losing his influence” in the Senate.

Bernstein points to two legislative events as proof: the 14 GOP senators who voted against Trump on Yemen and Senators Jeff Flake (R-AZ) and Tim Scott (R-SC) killing the confirmation of a Trump judicial nominee.

I want to add one more: staunch Trump ally Lindsay Graham (R-SC) publicly vowing not to vote for any year-end legislation — including a bill with money for the wall — unless and until the CIA briefs him on the Khashoggi murder, something the administration so far has refused to do.

As Bernstein points out, all of this makes the rest of the lame duck session of Congress a legislatively perilous time for Trump. With House Democrats feeling their blue wave political oats, Senate Republicans in open revolt and the Mueller investigation signaling big problems ahead for the administration, Trump is in his weakest political position since becoming president.

And that makes a Trump-induced shutdown next week far less likely than it was when this week started.

Given his rapidly worsening political situation, Trump’s best move next week could be to agree to a short-term continuing resolution with no money for his wall that forces another decision to be made early next year. That would give him the opportunity to blame the House Democratic majority if he doesn’t get the funding he wants.

]]>thebudgetguy2Trump 50.jpegTrump Is Again Playing Hamlet Over Shutting Down The Governmenthttps://thebudgetguy.blog/2018/11/29/trump-is-again-playing-hamlet-over-shutting-down-the-government/
Thu, 29 Nov 2018 14:56:47 +0000http://thebudgetguy.blog/?p=707

“To shut down or not to shut down” is what Donald Trump is yet again agonizing over right before our eyes.

I first posted about Trump’s tendency to be overly melodramatic about this question in September when he endlessly shared his thoughts about whether he would shut down the government if he didn’t get the money he wanted to start construction on his wall between the United States and Mexico. One day it was yes (“to be”) and the next day it was maybe or no (‘not to be”).

And some days it was both and, therefore, the Trump version of the whole soliloquy from “Hamlet.”

Ultimately, the answer was no shutdown. Despite his repeated threats that it was funds for his wall or else, Trump ultimately signed a continuing resolution without getting anything. In the end, he wussed out.

This may not say much about what Trump is going to do this time. After all, the situation is somewhat different given the impending Democratic takeover of the House of Representatives in less than six weeks and the perception by many that this is Trump’s last chance to fund his wall.

But given that big change, it’s noteworthy that Trump seems to be just as conflicted about a shutdown now as he was back in September. He continues to be anything but resolute and is using very Hamlet-like conditional language (“would” and “could” instead of “will”) to explain what he might do.

And his answer not only has changed daily, it’s been changing hourly. As reported today by Jacqueline Alemany in The Washington Post, Trump said two very different things in separate interviews on Wednesday. He told the Post “he was open to Plan B” if Congress didn’t provide the full $5 billion he wants for his wall but told Politico that he was ‘totally willing’ to shut the government down in the fight.”

All of this points out two very important things as far as a government shutdown next week is concerned.

First, Trump himself is not yet sure about either what he wants to or will do.

Second, anything Trump says each day between now and midnight next Friday must be taken with a whole shaker rather than just a grain of salt.

]]>thebudgetguy2Hamlet.jpegNo Way The Already Soaring Deficit Stops Congress And Trump From Responding To The Slowing U.S. Economyhttps://thebudgetguy.blog/2018/11/28/no-way-the-already-soaring-deficit-stops-congress-and-trump-from-responding-to-the-slowing-u-s-economy/
Wed, 28 Nov 2018 12:00:52 +0000http://thebudgetguy.blog/?p=665

One of the biggest questions now being asked by Wall Street and Washington pundits alike is whether, with the deficit already projected to exceed $1 trillion each of the next few years, will Congress and the Trump administration be able and willing to use fiscal policy when the U.S. economy tanks.

This is no longer a hypothetical to be discussed over drinks after work. It became a real issue over the past few weeks after both Goldman Sachs and J.P. Morgan both projected dramatically slowing economic growth that confirmed what the Congressional Budget Office has been saying since August.

In the past, a slowing economy has typically gotten Congress and the president to enact tax cuts and spending increases. The resulting higher budget deficit was considered normal, appropriate and politically acceptable.

But the federal deficit is already high because of last year’s tax cut. It’s officially projected by the Trump administration’s Office of Management and Budget and Treasury Department to be close to $1.1 trillion this year and it’s not at all certain that U.S. politics will tolerate it going much higher.

Without any further enacted changes in revenues and spending, CBO is forecasting that the deficit will exceed $1.5 trillion in 2028. A new stimulus program could easily get that to $2 trillion.

The previous nominally high record deficit was $1.4 trillion in fiscal 2009.

So the U.S. economy may need help but will American politics, which has been at least rhetorically anti-deficit since Puritan times, allow it?

I’m betting on a much higher deficit.

First, the U.S. may be rhetorically against deficits, but its actual track record is the exact opposite. In the 73 years since the end of World War II, there have only been eight (11 percent of the time) surpluses.

Second, even a rapidly rising, record-setting budget deficit will be no political match for the higher unemployment and lower stock markets that will come from an economic slowdown. The Democrat-controlled House and Republican-controlled Senate will be racing each other to show which one deserves more credit for dealing with it.

Third, Trump, who has already amply demonstrated that he’s okay with big deficits, won’t do anything to stop Congress from raising it even further given that his own reelection will be jeopardized if the economy isn’t doing well.

Fourth, it will make no difference that unemployment will be low and the stock market high relative to historical standards. The comparison voters (and, therefore, Washington) will make will be to recent their experience and expectations rather than to what they were like decades ago. By that standard, it will be “Damn the deficit, full speed ahead.”

Fifth, the split majorities in the next Congress makes a big spending increase/tax cut deal more likely than if a single political party controlled both the House and Senate. Neither Republicans nor Democrats will be able to claim all the credit for dealing with the economy, but both will be able to avoid all the blame for the record-setting increased deficit when they agree to what the other wants.

It shows that, two years in to his presidency, Trump still doesn’t understand enough about the federal budget to make informed choices about what it will take to reduce the deficit as he said before the election he wants to do.

(For the record, what it will take to reduce the deficit is my first on the first day of the graduate course I teach at Georgetown University’s McCourt School of Public Policy.)

It also demonstrates a complete failure by Office of Management and Budget Director Mick Mulvaney and the rest of the Trump administration’s economic team. How is it possible that they have had so little influence with and impact on the president that, almost two years after he took the oath of office, he is so clueless?

But I have to wonder whether this thinking is based on the very false premise that Trump wants to propose real deficit reductions. He may instead be looking for gimmicks and a “drain-the-swamp”-like slogan that can be repeated at his rallies. This would allow him to look like he cares about the deficit without taking any of the political risks of proposing the things that would actually reduce it.

Remember, this is the same Trump who was very comfortable embracing dynamic scoring to justify his big tax cut when mainstream fiscal policy and tax experts were adamant that it would spike the deficit (which it has).

This is also the Trump that had no problem sending others in his administration and his House Freedom Caucus allies to try to destroy the Congressional Budget Office when he thought CBO’s analyses would hurt what he wanted to do on health care and taxes.

Trump was also perfectly happy to grossly underestimate the cost of his military parade, continues to refuse to provide a detailed cost estimate for the wall he wants built between the U.S. and Mexico, still hasn’t said what his space force will cost and was happy to take credit for a $1.5 trillion federal infrastructure plan that relied on state and local governments to provide most of the money.

It would not be at all surprising, therefore, if Trump is looking for the same type of budget gimmicks now. For example:

A plan for the federal government to sell and then lease back some of the national parks.

A big sale of other government-owned assets.

Changing the definition of the budget deficit so certain big federal expenditures — such as the Defense Department and interest on the national debt — are excluded.

Changing the federal fiscal year so it’s 18 months for revenues but only 12 months for spending.

Renegotiating interest payments on the national debt.

These are all substantively and procedurally ridiculous. Then again, so was Trump’s bald-faced lie during the 2016 campaign that Mexico was going to pay for the wall and he easily got away with that.

All of this is the Trump version of the scene from the movie “Animal House” where, when faced with the realization that the fraternity he wants to expel is already on probation and there’s not much more he can do using established protocol, the dean invents something new — “double secret probation” — to deal with his problem.

Watch the clip below from the movie and tell me that you can’t see Trump and Mulvaney having that exact conversation.